It hit 2.54% on Wednesday, the highest since March 10, after
British inflation came in stronger than expected and central
bankers talked tough on inflation.
"To me this is just the normal up and down of markets. We
are probing where a new equilibrium might be," said Holger
Schmieding, chief economist at German lender Berenberg.
Germany's 2-year yield , which is highly sensitive
to changes in interest rate expectations, slipped 4 bps to
2.918%. It also touched a one-month high, at 2.988%, the
previous day.
Data on Thursday showed that German producer price inflation
fell sharply, and much more than expected, to 7.5% year-on-year
in March. Meanwhile, a gauge of French business confidence fell
more than anticipated.
"It strengthens the case for the doves of the ECB," said
Schmieding, referring to officials who are more cautious about
raising interest rates further.
Italy's 10-year bond yield fell 2 bps to 4.332%,
after hitting its highest since March 9 at 4.367% on Wednesday.
The spread between Italian and German 10-year borrowing
costs widened slightly to 186 bps. Investors watch
the gap closely as a sign of investor confidence in the more
indebted countries of the euro zone.
The ECB is due to release the minutes from its March meeting
- when it raised rates by 50 bps to 3% despite the banking
jitters - on Wednesday. They will give investors further clues
as to the feelings of ECB policymakers.
A number of ECB officials are due to talk on Thursday,
including President Christine Lagarde, Ignazio Visco, Pablo
Hernandez de Cos, and Isabel Schnabel.
Schnabel said on Wednesday that she could not say what the
central bank would do at its May meeting and that the banking
issues had complicated the situation, Bloomberg reported.
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German 2-year bond yield ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Harry Robertson; Editing by Kim Coghill)
By Harry Robertson
LONDON, April 20 (Reuters) - Euro zone government bond
yields fell on Thursday after hitting their highest levels in a
month the previous day.
Yields - which move inversely to prices - plummeted in March
as crises at Silicon Valley Bank and Credit Suisse sent
investors running for shelter in government bonds.
Yet they have been slowly grinding higher as the European
Central Bank, the U.S. Federal Reserve and Bank of England have
made clear that inflation is still public enemy number one and
that borrowing costs will likely rise further.
The yield on Germany's 10-year government bond ,
the euro zone benchmark, slipped 3 basis points (bps) on
Thursday to 2.472%.
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